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Gulf states set up company to facilitate money transfers

Riyadh-based company will allow GCC countries to transfer money 'without reliance on international currencies'

By Bloomberg

Mon 12 Mar 2018 07:16 PM

The Gulf Cooperation Council is setting up a company to facilitate direct money transfers among its six members, in a rare display of cooperation with isolated Qatar.

The Riyadh-based company will allow Gulf states to transfer money “without reliance on international currencies,” Kuwait central bank Governor Mohammed Al-Hashel told reporters on Monday following a meeting of regional central bankers in Kuwait City. The chief executive officer has been picked and all member states have agreed to contribute initial capital, Al-Hashel said.

“After that the company has to go out and borrow from the Gulf market or use the capital it has generated,” he said. The countries’ central bank governors will sit on the board and a secondary office will be set up in the United Arab Emirates, he said, without saying when the company would start operating.

The company is being started even though GCC members Bahrain, Saudi Arabia and United Arab Emirates have been boycotting a fourth member, Qatar, since June. They accuse Qatar of supporting terrorism, a charge it has denied.

“It’s a way of showing there are still areas for cooperation on the economic side even if they can’t agree on the political issues,” said Jason Tuvey, a London-based economist at Capital Economics. “It does seem odd they can agree to what they claim will be a deep move when at the end of the day there is still this blockade in place that has damaged Qatar’s economy. It does feel a bit like ignoring the elephant in the room.”

The Saudi-led bloc gave the gas-rich country a list of 13 demands to resolve the crisis, including shutting down Al Jazeera television, refraining from backing Islamist groups and scaling back ties with Shiite-ruled Iran. Mediation efforts by Kuwait and the US have failed.